Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from business or trade-like activities - Exclusions for farm land

CB 21: Farm land exclusion from sections CB 12 and CB 13

You could also call this:

“ Farm land sales: when you don't have to pay tax on profits ”

You don’t have to pay tax on money you make from selling farm land in some cases. This rule applies when you split up a big piece of farm land into smaller pieces and sell one of those pieces.

For this rule to work, a few things need to be true. First, you, your husband, wife, or partner must have been using the big piece of land mainly for farming before you split it up. Second, the piece of land you’re selling must be big enough that someone could still use it for farming. Third, you must be selling the land mainly so that it can be used for farming.

When deciding if you’re selling the land mainly for farming, people will look at different things. They’ll think about how much money you’re getting for the land and how much land in that area usually costs. They’ll also look at the deal you made to sell the land and if there are any special rules about how the land can be used. Lastly, they’ll check if the land is close to areas that aren’t being used for farming.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512458.

Topics:
Money and consumer rights > Taxes
Environment and resources > Farming and fishing
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CB 20: Business exclusion from sections CB 12 and CB 13, or

“Exclusion for businesses improving their own land”

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CB 22: Farm land exclusion from section CB 14, or

“Farm land sold for farming is exempt from certain tax rules”

Part C Income
Income from business or trade-like activities: Exclusions for farm land

CB 21Farm land exclusion from sections CB 12 and CB 13

  1. Sections CB 12 and CB 13 do not apply if—

  2. the land is a lot resulting from the division of a larger area of land into 2 or more lots; and
    1. immediately before the land was divided, the larger area of land was occupied or used by the person, their spouse, civil union partner or de facto partner, or both of them, mainly for the purposes of a farming or agricultural business carried on by either or both of them; and
      1. the area and nature of the land disposed of mean that it is then capable of being worked as an economic unit as a farming or agricultural business; and
        1. the land was disposed of mainly for the purpose of using it in a farming or agricultural business.

          1. The circumstances of the disposal of the land are relevant to the decision on whether the land was disposed of mainly for the purpose of using it in a farming or agricultural business. The circumstances include—

          2. the consideration for the disposal of the land:
            1. current prices paid for land in that area:
              1. the terms of the disposal:
                1. a zoning or other classification relating to the land:
                  1. the proximity of the land to any other land being used or developed for uses other than farming or agricultural uses.

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